Business Management

Paul W. Chang (Global) - Vineyards Raise a Glass to Big Data

The next time you raise a glass of your favorite imported wine - be it a Chardonnay from New Zealand, or a vintage blend of reds from Peru - be aware that there's trouble fermenting in the vineyards.

The popularity of wine is on the rise. Retail wine sales across the world rose 7% to $4.9 billion over the past year. And according to the Wine Institute, U.S. wine exports alone reached a record $1.4 billion in revenues in 2011, an increase of 21.7% over the prior year.

But unfortunately, the grapes aren't necessarily sweeter on the other side of the world.

Reports from the French government forecast that France's wine production may drop 20 percent in 2012, due to weather and diseased vines. Meanwhile, financial services provider Rabobank said that France, Italy and Spain are all on track to report a sharp decline in harvests from 2011 levels, decreasing wine output by as much as Chile's total annual production.

The volatility in the international wine supply will hit consumers hard where it hurts: in their wallets.

Weather and crop catastrophes can make a difference between serving Champagne or sparkling wine on New Year's Eve.

Wine production has morphed from a mom-and-pop endeavor to big business, putting new demands on big wine growers to stay on top of fluctuating global demand and extreme weather. They must make sense of a tangled vine of data to predict future events, from El Nino to floods and droughts.

Predicting future trends is stock in trade for fashion designers. It's also the life blood of wine producers who rely on conditions beyond their control, and whose products won't sell for years after their creation.

For winemakers, there exists only a brief window of time to identify and fix problems at their vineyards. The reason: highly-specific growing and harvesting seasons, combined with a variety of potential pitfalls, including grape-destroying fungus, mold and insects.

Case in point: In 2011, Virginia grape growers discovered an infestation of stink bugs that, after attaching themselves to grapes, were picked unknowingly by harvesters and ended up in wine presses. As few as 10 stink bugs crushed into one ton of grapes can ruin an entire batch of wine.

Imagine if the first sign of infestation was spotted and quickly relayed back to decision-makers at the winery, sparking a mandate that employees at all vineyards halt grape shipments.

The key to successfully capturing and using such information lies in business analytics. Vintners can harvest all types of data to enable faster interpretation of troublesome news from the vineyards, as well as predict business outcomes and spot trends before they happen.

Delegat's Wine Estates produced its first vintage back in 1947 and is now New Zealand's largest listed wine company. By using analytics technology, Delegat's looks at a range of data - from wine sales by region to grape yields across vineyards - and places the information into forecasting models that pose "What if?" scenarios.

Delegat's can now gauge whether it's time to purchase additional land for grape growing, to accommodate shifts in supply and demand. It can also better focus its employees' schedules and skills, having shortened its planning cycles by six weeks and discarded its outdated system of time-consuming spreadsheets.

Better data analysis can impact other areas of the wine business as well. A vineyard in Napa Valley applies sensors to each vine to measure how much water it takes in. Then it sends that information to a computer that processes the data.

Higher education is also investigating ways to bring the wine business into the era of Big Data. Researchers from five U.S. universities, including the University of California Davis and Washington State University are developing a system of interconnected sensors that monitor and control irrigation for wine grapes and other crops. In light of the crushing effect that heat waves have on vineyards, such analytics-driven projects to manage water usage may offer another way to safeguard grape supply.

As any sommelier will tell you, a smart winemaker must rely on time-honored factors such as instinct, attention to detail, and an understanding of the science behind grape growth. But in an increasingly interconnected world, where global supply disruptions can strain exports, it's vital for wineries to apply technology where it matters most.

Predicting supply shortfalls, understanding the effects of a growing international customer base, smarter usage of irrigation - these are all areas where business analytics can help a winery survive during the challenging times, and thrive during periods of opportunity.

By Paul W. Chang, IBM Worldwide Consumer Products Leader



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